Sunday, September 15, 2019

Philippines says won't bar Chinese proposals for shipyard takeover

The logo of Hanjin Shipping Co is seen on a replica of shipping containers at its headquarters in Seoul August 31, 2016. — Reuters pic

MANILA, April 25 — All offers from potential buyers of a strategically located but debt-laden Philippine shipyard will be welcome, the trade minister said today, ruling out barring Chinese firms over national security fears.

Trade Secretary Ramon Lopez said the government would not, and could not, block interested buyers of distressed shipbuilder Hanjin Philippines, which defaulted on US$1.3 billion (RM5.36 billion) in loans, of which US$900 million is owed to South Korean banks and the rest to five Philippine lenders.

Hanjin, a unit of South Korea’s Hanjin Heavy Industries & Construction Co Ltd, until recently employed 20,000 workers at its yard in Subic Bay, which until 1992 was home to a US navy base used during World War Two and the Vietnam War.

Subic is considered an important asset because of the bay’s shelter, deep water and access to the South China Sea.

Lopez was responding to a report by Japan’s Nikkei Asian Review that the Philippine government was set to bar Chinese from bidding for the Subic facility because of national security concerns, citing an unidentified trade ministry official, who said the defence ministry had signified reservations.

“We did not make any statement barring Chinese or any nationality from bidding,” Lopez told Reuters.

Lopez said it would be up to creditors to decide which offer to accept.

In January, Hanjin Philippines filed for court rehabilitation proceedings as it grappled with a slump in the global shipping and shipbuilding industry.

Defence Secretary Delfin Lorenzana, has voiced his support for the shipyard to be controlled by a Philippine entity, possibly with the navy buying a stake and using it to build vessels.

Interest from two unidentified Chinese firms, which was confirmed to Reuters by a Philippine trade official, comes as China rapidly expands and fortifies its presence in the South China Sea, a trade route for US$3 trillion of commerce each year, amid global concern that Beijing is seeking to establish a new hegemony in Asia, politically, economically and militarily.

It also comes amid US warnings and growing global scrutiny of Chinese technology firms because of fears they could be vehicles for Chinese state spying, which they have rejected.

John Thomas Deveras, senior executive vice-president of the mid-sized lender Rizal Commercial Banking Corp, said Chinese were not being excluded and at least eight foreign companies had expressed interest and buying Hanjin. Hanjin borrowed US$145 million from RCBC.

“All companies can approach and negotiate,” Deveras told Reuters.

He said American, Japanese, Dutch, French, Swedish and South Korean firms had made approaches, but declined to name them.

No timeframe has been announced for the sale.

Cezar Consing, president of another creditor, Bank of the Philippine Islands, which lent US$52 million to Hanjin Philippines, told shareholders today that talks on the sale were progressing.

“We believe there’s some light at the end of the tunnel,” he said. — Reuters